China Signs First Long-Term Deal for U.S. Natural Gas

China has signed its first long-term contract to import U.S. liquefied natural gas, following a push by the Trump administration to open the rapidly growing market to U.S. suppliers.

Cheniere Energy Inc. said Friday that it had signed two purchase agreements with China National Petroleum Corp. to export LNG from the U.S. Gulf Coast to China.

Under the deal, China National Petroleum will receive 1.2 million tons of LNG a year through 2043. A portion of that supply will ship this year and the rest will begin in 2023.

President Donald Trump has made U.S. LNG exports a focus of his plans to make America an energy superpower. Commerce Secretary Wilbur Ross announced a deal last May to "expedite" the approvals of U.S. exports to China. While the deal didn't alter any existing regulations, it was billed as a signal to China that U.S. LNG suppliers are open for business.

Mr. Trump brought two U.S. LNG executives with him during his trip to Beijing in November, including Cheniere Chief Executive Jack Fusco. During the trip, Cheniere signed a memorandum of understanding with China National Petroleum to eventually ink LNG export contracts.

"We are pleased to announce these LNG contracts with China National Petroleum Corporation, an important global energy player in one of the largest and fastest-growing LNG markets world-wide," Mr. Fusco said Friday.

So far, 34 U.S. cargoes of LNG have landed in China, all of them from Cheniere's facilities, the first company to export U.S. LNG from the lower 48 states. But the deal is China's first long-term contract with a U.S. company, the company said. Such contracts are favored by exporters because they help them line up financing for expensive growth projects.

Cheniere didn't disclose the estimated value of the contract but said the purchase price for LNG would be indexed to Henry Hub, the leading North American natural-gas benchmark, which is becoming more important in the global gas trade.

China is the fastest-growing importer of LNG, as it seeks to move to cleaner fuels and heat homes in the northern part of the country with natural gas. After importing less than 10 million tons of LNG in 2010, China's imports are expected to grow to more than 60 million tons by 2030, according to analysts.

That is potentially good news for U.S. suppliers who have access to vast amounts of natural gas unlocked by U.S. shale drillers. U.S. exporters chill the natural gas to a liquid state so it can be loaded on boats for export, a hugely expensive process.